How to find a good trading mentor and the 5 places where not to look for help with your trading!

The data is in, mentoring is a good thing. 79% of millennials see mentoring as crucial to their success, and 25% of employees enrolled in a mentoring program made more money!

But finding the right guide, mentor, and educator, can be a tricky thing to do.

In this post about mentoring in trading, we will look at

• Some of the pushback we hear about mentoring
• How qualified does a mentor need to be?
• Why the trading education industry gets such a bad rap
• The top 5 places to avoid getting advice from
• Summary

As I write this I am aware that as an owner of a Trading platform, that at its heart is about education and mentoring, it is hard for me to sound impartial, and it will also be hard for me not to sound like I am constantly trying to sell our services!

However, in this post, I am going to try to give you a balanced perspective on the Trading education industry, my own insight and experience with mentors throughout my career, and hopefully some insight into why we started TradeDay.

Let’s start by taking a look at some of the frequently asked questions and objections around trading mentors and educators.

Trading educators are a waste of time, I can learn it all for free

This is something I occasionally read online in trading forums, and quite frankly I am left baffled by the sentiment.

In any hobby, profession, or performance field, there are educators, people we can turn to if we want to improve our skills.

In my spare time, I like to play the guitar, and I like to golf. To improve my skill in these two pursuits I take lessons.

Can I teach myself to be a better guitarist with all the free online resources? Or improve my swing by watching endless youtube videos ??…. I believe I actually can – but only to a point. There are some merits to using this approach, but there are also major pitfalls that we will examine later.

So going online can be helpful, but through experience, I have realized that nothing beats having access to a guitar teacher or a golf pro, someone I know I can trust, and it is through these guided lessons (and practice) that I really start to improve.

Those who can’t, teach

Another sentiment I hear touted around the forums, and again leaves me scratching my head…

Following on with my guitar and golfing analogy, just because my guitar teacher is not on tour in a rock band, or my golf pro at my local club is not on the PGA tour, does that mean they are not extremely capable in their field? Does it mean that they are not good teachers? Does it mean that I shouldn’t trust them with my own development?

I can already trade, why do I need a mentor?

I think the answer to this is a personal one, and you may decide that you don’t need one when you are at the stage of being constantly successful in your trading.

Personally, I had several mentors during my 15-year career as a professional trader, and some of those would play different roles as my needs changed over the years.

To start, I needed someone to teach me the mechanics of trading, and as I progressed I realized very quickly that I needed someone to help me understand the psychology of the markets and the psychology of being a trader.

As the years went on, the weight of the mentor’s influence would ebb and flow depending on my needs. Sometimes it would be structural,l as I faced structural challenges in my trading, for example transitioning from a floor trader to an office-based trader, or understanding the structural changes in the markets as they become more automated.

Sometimes it would be long sitdowns as we worked out a plan to get out of a trading rut I found myself in, sometimes they were nothing more than a few sentences or a passing comment to help me get my thinking straight.

Whatever the frequency of their input, or the weight, I would always feel the benefit of it afterward and be a better trader for it.

I attribute the ability to sustain a 15 years successful trading career to it.

What level of skill should my mentor have?

This one is more tricky to answer, and you will have to make some decisions for yourself in terms of how experienced and skillful you need someone to be in order to help you advance. Me, I firmly believe that the person teaching needs to have achieved at least the following:

• Some level of success that the student can aspire to
• Have a track record
• Have many years of experience so they have built an understanding of the challenges new students will face in different scenarios
• Have relevant experience

Do they need to be the best in their field to be a great mentor?

To answer this question I will turn to sports once again.

Sir Alex Furgeson, the former manager of Manchester United is widely considered to be one of the greatest soccer managers of all time, yet, was he the greatest soccer player of all time? – no! Sir Alex, because of his experience, had credibility as a manager, and a track record. His years equipped him to deal with many different scenarios and challenges, and on top of that, he had the ability to bring the best out in people.

Why does the trading education industry get such a bad rap?

So, I’ve laid the arguments for why teaching/coaching/mentoring are a good thing, so why does it get such a bad rap, especially when it comes to trading?

I think the answer lies both with the producer, and the consumer. Let’s take a look at the consumer first.

Unrealistic Expectations

For a lot of people looking for help with their trading, they come from a place of unrealistic expectations. This isn’t entirely their fault because there are a lot of bad actors in the space promising unrealistic results (we’ll take a look at them when we look at producers), and the media is littered with stories of traders who ‘got rich quick’.

But there is a strange phenomenon in trading where people come to it with expectations more unrealistic than they would any other pursuit.

Think about it, if someone was selling you a guitar course that guaranteed you success and that you would be touring, selling out venues, at the end of it, you would be very skeptical! Yet why do people believe so-called trading gurus who claim their system is right 90% of the time and that it won’t be long before you are flying in your private jet just like they are?

Getting burned and losing money

Why are people seemingly more taken in with the promise of easy money than they are by anything else? FOMO, Fear Of Missing Out, definitely plays a part.

It may be that on the face of it trading seems so simple – it’s easy to start trading, and you either buy it, or you sell it…(whereas we know learning the guitar is difficult and takes years of practice to be any ‘good’). Therefore we might easily believe that the ‘secret’ to successful trading is easy…only if someone will show us the way.

So it’s understandable that some people fall victim to these promises of easy wealth. The problem with trading is that the truth hurts in more ways than one. Purchasing these systems, or following these gurus, not only stings our pride when we realize we’ve been duped, but it can also hurt us financially, significantly in some cases, as we burn through our brokerage accounts trying to make their system work.

Let's look at the role of the producer

Let’s take a look at the producer, and how some things can seem so alluring. These are my top 5 people and places to avoid getting your education from.

• The latest, young social media guru. The clue is in the title – young. There are good people, doing good things on social media, no doubt,  But, in an industry where the environment can go through extremes such as market squeezes, or crashes, where volatility is in flux, and where the geopolitical landscape can influence the direction of a product, or where long term technical patterns can emerge and repeat themselves. Do you really want to be getting your advice from someone who hasn’t lived, and traded through these events?
• The active forum user. Forums are a great place to hang out and accelerate your learning. But be wary of the active forum user with thousands of posts to their name. Some of those people are great they have been around a long time and are actively sharing their experience for your benefit, but some just like the sound of their own voices! Remember that they are anonymous, what gives them credibility as a source other than their post count? There is a tendency for new forum users to believe every post a longtime, active forum user makes, yet I have seen plenty of them get things wrong, and write answers to questions that are misleading. I have no doubt most of this is unintentional, but nevertheless, their answers are usually taken as the ‘truth’ just because of their post count.
• The guru promises you great returns or guarantees you great success. Back in the day, these used to be known as  Snake Oil salesmen. Even if they can provide you with a great track record for their system BE SKEPTICAL. Anyone can fabricate a good track record, either through selective data sampling, or outright fraud. There is no system that will predict winning trades 90% of the time without the potential for huge drawdowns and huge amounts of risk. There are no guarantees in trading.
• The secret chat / the insider’s chat group. “Just pay $x  to join our exclusive chatroom and we will guarantee you insider knowledge of the next big move”. A simple bait-and-switch scam that will have you become the trading fodder of the owners of the chat as they use you to pump prices of stocks so they can sell the worthless junk to you.
• Anyone who posts a youtube video from inside a private plane, or sitting on an expensive yacht. Come on, if you are really a successful trader why do you have to employ a cheap psychological sales trick to get us to think you must be super successful?

Some, or all of those on that list, might seem obvious to you, but unfortunately, there is a whole industry out there dedicated to promising you things they can’t deliver in order to part you from your cash. It is these bad actors that give the education and mentoring industry a bad name.

My final piece of advice is to do your due diligence on the person or company.

Are they a real company with a physical address or are they hiding behind a shell or a P.O.box? Is the ownership transparent? Do they put their own money at risk, are they investing in themselves, or are they just selling you something for you to put your own money into?

And always ask yourself – does this person or company have the right experience to help me become successful?

Summary

Do I still have mentors today?

The answer is yes, in fact, I took a course in designing a website from an online marketing guru and built the TradeDay.com website according to the principles of that course, and later joined a membership site that helped guide me through the building out of the members’ area of our site.

I continue to trade part-time and often find myself turning to experienced traders to discuss my trading and how to improve it or to just help me get my ‘trading thought process’ back on track.

How do I determine if these are the right people to help me? I look for credibility and authority, and I follow the principles that have guided me through my 30 years in this industry when it comes to seeking advice and mentorship.

The 5 questions to ask when looking for a trading mentor.

1. Does that person have experience and how long have they been trading
2. Has that person been successful?
3. Has the person been successful at passing on and teaching their skill?
4. Does that person have a good reputation?
5. Is the experience relevant for today’s markets?

These are the traits I look for in my mentors and teachers, and these are the founding principles we built TradeDay on.

Trading is not easy, and not everyone who tries it will succeed. It takes time and it takes effort, but for those that are willing to put in the work necessary to succeed, it can be the greatest job in the world!!

Good luck with your trading,

James